BILL NUMBER: SB 639	CHAPTERED  09/27/00

	CHAPTER   778
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 27, 2000
	PASSED THE SENATE   AUGUST 30, 2000
	PASSED THE ASSEMBLY   AUGUST 28, 2000
	AMENDED IN ASSEMBLY   AUGUST 25, 2000
	AMENDED IN ASSEMBLY   AUGUST 18, 2000
	AMENDED IN ASSEMBLY   AUGUST 7, 2000
	AMENDED IN ASSEMBLY   JUNE 19, 2000
	AMENDED IN ASSEMBLY   AUGUST 19, 1999
	AMENDED IN ASSEMBLY   JULY 15, 1999
	AMENDED IN ASSEMBLY   JULY 1, 1999

INTRODUCED BY   Senator McPherson

                        FEBRUARY 24, 1999

   An act to add Section 320.5 to the Penal Code, relating to
charitable gaming.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 639, McPherson.  Gambling:  charitable raffles.
   Existing law generally prohibits lotteries, but provides for the
operation of the California State Lottery and authorizes bingo games
to be conducted for charitable purposes pursuant to local ordinances.
  The California Constitution, as amended by initiative, also
empowers the Legislature to authorize private, nonprofit, eligible
organizations, as defined, to operate raffles to provide funding for
beneficial and charitable works, subject to specified requirements.
   This bill would implement that latter authority, and would provide
that a raffle conducted by an eligible organization, as defined, for
the purpose of directly supporting specified beneficial or
charitable purposes in California, or financially supporting another
private, nonprofit, eligible organization that performs those
purposes, is not prohibited if, among other requirements, each ticket
is sold with a detachable coupon or stub with identifying numbers,
the draw is conducted in California under the supervision of a
natural person who is 18 years of age or older, and at least 90% of
the gross receipts generated from the sale of raffle tickets are used
to benefit or provide support for beneficial or charitable purposes,
as defined.  The bill would limit the use of raffle funds to
purposes in California.  This bill would provide that an eligible
organization is a private, nonprofit organization that has been
qualified to conduct business in California for at least one year
prior to conducting a raffle and is exempt from taxation pursuant to
specified provisions of California law.  The bill would provide that
any person receiving compensation in connection with the operation of
a raffle shall be an employee of the eligible organization that is
conducting it, that in no event may compensation be paid from
dedicated funds, and that no person or entity shall hold a financial
interest in the conduct of a raffle except the eligible organization
itself and other eligible organizations receiving funds as described.
  The bill would provide that an employee of an eligible organization
who is a direct seller of raffle tickets shall not be treated as an
employee for workers' compensation purposes or unemployment insurance
purposes if certain requirements are met.  The bill would provide
that no raffle may be conducted by means of, or otherwise utilize,
any gaming machine, apparatus, or device, and would provide that no
raffle may be advertised, operated, or conducted, nor may raffle
tickets be sold, traded, or redeemed, over the Internet, or within an
operating racetrack inclosure or satellite wagering facility, or
within a gambling establishment, as specified.  This bill would also
provide that no eligible organization shall conduct or participate in
a raffle without first having obtained and thereafter maintained a
registration from the Department of Justice, as specified.  This bill
would authorize the department to issue regulations to enforce these
provisions, to assess an annual registration fee of $10 to be
deposited in the General Fund to cover the actual costs of
establishing and operating this registration system, and would
require the department to maintain a data base of registrants, with
specified exemptions, and conduct specified proceedings in compliance
with the Administrative Procedure Act.
   This bill would require the Department of Justice to conduct a
study and report to the Legislature by December 31, 2003, on
specified issues concerning the impact of these provisions on
raffles.
   These provisions would become operative on July 1, 2001.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 320.5 is added to the Penal Code, to read:
   320.5.  (a) Nothing in this chapter applies to any raffle
conducted by an eligible organization as defined in subdivision (c)
for the purpose of directly supporting beneficial or charitable
purposes or financially supporting another private, nonprofit,
eligible organization that performs beneficial or charitable purposes
if the raffle is conducted in accordance with this section.
   (b) For purposes of this section, "raffle" means a scheme for the
distribution of prizes by chance among persons who have paid money
for paper tickets that provide the opportunity to win these prizes,
where all of the following are true:
   (1) Each ticket is sold with a detachable coupon or stub, and both
the ticket and its associated coupon or stub are marked with a
unique and matching identifier.
   (2) Winners of the prizes are determined by draw from among the
coupons or stubs described in paragraph (1) that have been detached
from all tickets sold for entry in the draw.
   (3) The draw is conducted in California under the supervision of a
natural person who is 18 years of age or older.
   (4) (A) At least 90 percent of the gross receipts generated from
the sale of raffle tickets for any given draw are used by the
eligible organization conducting the raffle to benefit or provide
support for beneficial or charitable purposes, or it may use those
revenues to benefit another private, nonprofit organization, provided
that an organization receiving these funds is itself an eligible
organization as defined in subdivision (c).  As used in this section,
"beneficial purposes" excludes purposes that are intended to benefit
officers, directors, or members, as defined by Section 5056 of the
Corporations Code, of the eligible organization.  In no event shall
funds raised by raffles conducted pursuant to this section be used to
fund any beneficial, charitable, or other purpose outside of
California.  This section does not preclude an eligible organization
from using funds from sources other than the sale of raffle tickets
to pay for the administration or other costs of conducting a raffle.

   (B) An employee of an eligible organization who is a direct seller
of raffle tickets shall not be treated as an employee for purposes
of workers' compensation under Section 3351 of the Labor Code if the
following conditions are satisfied:
   (i) Substantially all of the remuneration (whether or not paid in
cash) for the performance of the service of selling raffle tickets is
directly related to sales rather than to the number of hours worked.

   (ii) The services performed by the person are performed pursuant
to a written contract between the seller and the eligible
organization and the contract provides that the person will not be
treated as an employee with respect to the selling of raffle tickets
for workers' compensation purposes.
   (C) For purposes of this section, employees selling raffle tickets
shall be deemed to be direct sellers as described in Section 650 of
the Unemployment Insurance Code as long as they meet the requirements
of that section.
   (c) For purposes of this section, "eligible organization" means a
private, nonprofit organization that has been qualified to conduct
business in California for at least one year prior to conducting a
raffle and is exempt from taxation pursuant to Sections 23701a,
23701b, 23701d, 23701e, 23701f, 23701g, 23701k, 23701l, 23701t, or
23701w of the Revenue and Taxation Code.
   (d) Any person who receives compensation in connection with the
operation of the raffle shall be an employee of the eligible
organization that is conducting the raffle, and in no event may
compensation be paid from revenues required to be dedicated to
beneficial or charitable purposes.
   (e) No raffle otherwise permitted under this section may be
conducted by means of, or otherwise utilize, any gaming machine,
apparatus, or device, whether or not that machine, apparatus, or
device meets the definition of slot machine contained in Section
330a, 330b, or 330.1.
   (f) No raffle otherwise permitted under this section may be
conducted, nor may tickets for a raffle be sold, within an operating
satellite wagering facility or racetrack inclosure licensed pursuant
to the Horse Racing Law (Chapter 4 (commencing with Section 19400) of
Division 8 of the Business and Professions Code) or within a
gambling establishment licensed pursuant to the Gambling Control Act
(Chapter 5 (commencing with Section 19800) of Division 8 of the
Business and Professions Code).  A raffle may not be advertised,
operated, or conducted in any manner over the Internet, nor may
raffle tickets be sold, traded, or redeemed over the Internet.  For
purposes of this section, advertisement shall not be defined to
include the announcement of a raffle on the web site of the
organization responsible for conducting the raffle.
   (g) No individual, corporation, partnership, or other legal entity
shall hold a financial interest in the conduct of a raffle, except
the eligible organization that is itself authorized to conduct that
raffle, and any private, nonprofit, eligible organizations receiving
financial support from that charitable organization pursuant to
subdivisions (a) and (b).
   (h) (1) An eligible organization may not conduct a raffle
authorized under this section, unless it registers annually with the
Department of Justice.  The department shall furnish a registration
form via the Internet or upon request to eligible nonprofit
organizations.  The department shall, by regulation, collect only the
information necessary to carry out the provisions of this section on
this form.  This information shall include, but is not limited to,
the following:
   (A) The name and address of the eligible organization.
   (B) The federal tax identification number, the corporate number
issued by the Secretary of State, the organization number issued by
the Franchise Tax Board, or the California charitable trust
identification number of the eligible organization.
   (C) The name and title of a responsible fiduciary of the
organization.
   (2) The department may require an eligible organization to pay an
annual registration fee of ten dollars ($10) to cover the actual
costs of the department to administer and enforce this section.  The
department may, by regulation, adjust the annual registration fee as
needed to ensure that revenues willfully offset, but do not exceed,
the actual costs incurred by the department pursuant to this section.
  The fee shall be deposited by the department into the General Fund.

   (3) The department shall receive General Fund moneys for the costs
incurred pursuant to this section subject to an appropriation by the
Legislature.
   (4) The department shall adopt regulations necessary to effectuate
this section, including emergency regulations, pursuant to the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
   (4) The department shall maintain an automated data base of all
registrants.  Each local law enforcement agency shall notify the
department of any arrests or investigation that may result in an
administrative or criminal action against a registrant.  The
department may audit the records and other documents of a registrant
to ensure compliance with this section.
   (5) Once registered, an eligible organization must file annually
thereafter with the department a report that includes the following:

   (A) The aggregate gross receipts from the operation of raffles.
   (B) The aggregate direct costs incurred by the eligible
organization from the operation of raffles.
   (C) The charitable or beneficial purposes for which proceeds of
the raffles were used, or identify the eligible recipient
organization to which proceeds were directed, and the amount of those
proceeds.
   (6) The department shall annually furnish to registrants a form to
collect this information.
   (7) The registration and reporting provisions of this section do
not apply to any religious corporation sole or other religious
corporation or organization that holds property for religious
purposes, to a cemetery corporation regulated under Chapter 19 of
Division 3 of the Business and Professions Code, or to any committee
as defined in Section 82013 that is required to and does file any
statement pursuant to the provisions of Article 2 (commencing with
Section 84200) of Chapter 4 of Title 9, or to a charitable
corporation organized and operated primarily as a religious
organization, educational institution, hospital, or a health care
service plan licensed pursuant to Section 1349 of the Health and
Safety Code.
   (i) The department may take legal action against a registrant if
it determines that the registrant has violated this section or any
regulation adopted pursuant to this section, or that the registrant
has engaged in any conduct that is not in the best interests of the
public's health, safety, or general welfare.  Any action taken
pursuant to this subdivision does not prohibit the commencement of an
administrative or criminal action by the Attorney General, a
district attorney, city attorney, or county counsel.
   (j) Each action and hearing conducted to deny, revoke, or suspend
a registry, or other administrative action taken against a registrant
shall be conducted pursuant to the Administrative Procedure Act
(Chapters 4.5 and 5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code).  The department may
seek recovery of the costs incurred in investigating or prosecuting
an action against a registrant or applicant in accordance with those
procedures specified in Section 125.3 of the Business and Professions
Code.  A proceeding conducted under this subdivision is subject to
judicial review pursuant to Section 1094.5 of the Code of Civil
Procedure.
   (k) The Department of Justice shall conduct a study and report to
the Legislature by December 31, 2003, on the impact of the this
section on raffle practices in California.  Specifically, the study
shall include, but not be limited to, information on whether the
number of raffles has increased, the amount of money raised through
raffles and whether this amount has increased, whether there are
consumer complaints, and whether there is increased fraud in the
operation of raffles.
   (l) This section shall become operative on July 1, 2001.
   (m) A raffle shall be exempt from this section if it satisfies all
of the following requirements:
   (1) It involves a general and indiscriminate distributing of the
tickets.
   (2) The tickets are offered on the same terms and conditions as
the tickets for which a donation is given.
   (3) The scheme does not require any of the participants to pay for
a chance to win.
